A Final Crack in the Ilisu Dam Project?

Back in December, I wrote about the problems faced by the controversial Ilisu dam project in southeast Turkey, especially after its main financial backers -- Germany, Austria and Switzerland -- suspended credit guarantees for the project. Now the countries have announced that they are pulling out of the dam project completely. From Reuters:

Three Western export credit insurers quit Turkey's planned Ilisu dam on the Tigris River on Tuesday because it is failing World Bank environmental and heritage standards, throwing the 1.2 billion euro ($1.68 billion) project into doubt.

The dam is due to provide 3.8 billion kilowatt hours of electricity a year and help wean Turkey off reliance on energy imports. But it will also swallow up more than 80 villages and hamlets by the time of its planned completion in 2013.

Work on the project was halted in December when the three insurers -- Euler Hermes Kreditversicherung of Germany, Austria's Oesterreichische Kontrollbank and Swiss Schweizerische Exportrisikoversicherung -- ordered suppliers to stop working on the dam for 180 days.

"The agreed contractual conditions regarding the environment, cultural heritage and relocation could not be fulfilled," the insurers, which were providing credit guarantees for the German, Austrian and Swiss suppliers, said in a joint statement.

You can read the full article here.

Environment minister, Veysel Eroglu, said a few days ago that work on Ilisu would continue even without foreign backing, but it's not clear if Turkey has the financial or technical resources to build a dam like this. This latest news may not mean the end of the Ilisu project, but it certainly will delay its construction in a meaningful way.

For more background about the Ilisu dam project and the wider issue of water management in the southeast, take a look at this article I wrote last year for Eurasianet.

(Photo -- A view of the historic town of Hasankeyf, which would be flooded if the controversial Ilisu dam were to be built. By Yigal Schleifer)